Medium Term Moves: The 150 Pip Strategy

Video Transcription:

Hello traders, welcome to the pro trading course and the 8th module professional fx and CFD trading. In this lesson we are going to learn how to trade medium term moves with the 150 plus pip strategy.

Now we are going to use the same concepts we used for the 50 pip strategy but in a longer term, alright. So we are going to look at the one hour chart, maybe the four hour chart and we are going to use some other indicators in our charts. Now, right here we are looking at the crude oil June expiration contracts and basically what we have here are the weekly and monthly payments, with the weekly resistance, weekly support levels and of course the monthly resistance and monthly support levels.

We also have the previous weekly and monthly high-lows. Now we are going to focus on the previous weeklies and previous monthly high-lows. The reason we are going to focus on them is because we are trading longer term trades or longer term moves or cycles. The first thing we want to do, is to locate what seems to be confluence in levels. This means that we are going to locate the weekly support one in this case with the previous weekly low. Now when price drops to the previously weekly low and the previous, I’m sorry the weekly support one, we might have a setup on our hands.

Now, the next step is to look for divergence in the RSI. We are going to use an RSI with a 9 period setting. And as you can see price right here, it’s making lower lows. If we go to the other side we can see that we have higher lows. And this is what we call a bullish divergence. When you find the bullish divergence on the RSI at the previous weekly low in confluence with any pivot level, then you have a setup to go long. This is a simple method of going long on medium term cycles. Now, where are we going to take profits? First of all, let me tell you where we are going to enter the market and where we are going to take profits. You can see that we need for the divergence to develop. This means that we do need the RSI to turn positive and in this case, the RSI turns positive on this candle right here. Or when this candle starts to form, you can see that when this candle starts to form, the RSI actually had already crossed the 50 level.

Now let me recapitulate on what we have learned so far or where we are standing at. We need the price to hit the previous weekly low for a long opportunity or the previous weekly high for a short opportunity. Then we go to the other side and we need to find divergence, after we find divergence we need the RSI to turn positive because we are still, even though we have divergence, we are still in bear territory. When we go ahead or when the RSI crosses to the bull side, we go long right here with our stocks below the previous low or in this case, below the weekly support one. We have a 119 tick stop-loss in crude oil. You need to determine your position size accordingly and according to your risk management moves.

Then we are going to take profit at the previous weekly high because we are long from the previous weekly low. And of course you need confluence with another levels, you can see right here we have the previous weekly high. We have also, the previous monthly high, we have the monthly resistance one and the weekly resistance one. This is a very strong area where buyers or long positions are going to be taking profit. So what we are going to do here is we are going to put our targets right here, just a few ticks below the confluence area and the reason is because we want to get filled on our trade. We don’t want price to just come a few ticks from our target and then move back down.

Alright, and right here we would have made exactly 200 ticks, so we have an almost 1:2 risk to reward scenario on this trade. As you can see this position was held for about a day and a half. Now we are going to look at a short example here on the U.S dollar/Canadian dollar. You can see that we have the previous weekly high right here, and we have the weekly resistance one right here. So this is our confluence zone where we are going to try to find a divergence. Now you can see that we have…Well price is actually making higher-highs and right here you can see that we have an RSI making lower highs. Which means that we do have a bearish divergence in our hands right at the confluence levels.

Again, we need for the RSI to move to the short side or to the bear side, and as you can see right here, the RSI moves to the bearish zone right at the end of this candle. This means that we are going to go short right here at the end of this candle when the RSI turns negative. And we are going to put our stop-loss right above the weekly high in this case, because it’s right above our confluence zone. This means that we are going to have around a 89 pip stop-loss. And we are going to take profit right here, you can see that we have the previous weekly low in confluence with the monthly support one and the weekly support one. So this is our target zone, we are going to put our targets a few pips above this zone. And this gives us actually a win of about 180 pips. Which means that we have a better than a 1:2 risk to reward scenario in this trade. And basically this is how you are going to be trading medium term cycles with the 150 plus pip strategy.

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